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Sensex, Nifty rise over a percent each; 5 factors behind the rebound

Better than expected US GDP data and a decline in the unemployment claims boosted market sentiment.

March 26, 2021 / 03:45 PM IST

After witnessing two consecutive days of the sell-off, the Indian market rebounded sharply on March 26, with equity barometer Sensex jumping 795 points in intraday trade and Nifty rising above 14,550.

Investors bought shares across the board after the recent correction bought valuations down. Metal, auto, bank, financials, FMCG and IT- all indices rose with strong gains.

Sensex closed 568 points, or 1.17 percent, higher at 49,008.50 and Nifty settled at 14,507.30, up 182 points or 1.27 percent.

The buying was widespread as the BSE Midcap and Smallcap indices closed 1.66 percent and 1.08 percent higher, respectively.

Among the sectors, BSE Metal rose 3.49 percent while consumer durables and telecom indices ended with gains of 2.76 percent and 2.24 percent, respectively. All sectoral indices ended in the green.

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Here are 5 factors that could have triggered a fresh wave of buying:

1. Positive global cues

Most major global markets rose today and the positive sentiment spilled to the Indian bourses too.

As reported by Reuters, global shares bounced back on Friday, with Asian stocks recovering from a three-month low, as investors focused more on optimism about the global economic recovery than rising tensions between the West and China.

2. Improving macro data in the US

Better than expected US GDP data and a decline in the unemployment claims boosted market sentiment.

As reported by Reuters, the number of Americans filing new claims for unemployment benefits dropped to a one-year low last week as economic activity rebounds after weather-related disruptions in February.

Gross domestic product increased at a 4.3 percent annualized rate, the Commerce Department said in its third estimate of fourth-quarter GDP growth. That was up from the 4.1 percent pace reported last month but a sharp deceleration from the record 33.4 percent rate logged in the third quarter.

Read more: US weekly jobless claims hit one-year low; fourth-quarter GDP revised up

3. Bargain hunting

After the recent correction in the market, investors are buying stocks in most sectors as the valuations have come down.

As analysts have been saying that any fall in the market is an opportunity to buy, investors are betting on sectors such as metal, auto and bank that are likely to benefit most with economic recovery.

Read more: Use this opportunity to buy, say experts

4. Vaccination picks pace

With vaccination picking pace, market sentiment is likely to improve further.

"The fact that vaccination is accelerating is likely to support markets. In this race between Covid spread and vaccination, the latter will eventually succeed. The market knows that. Volatility may be there for some time before stability emerges," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"The second wave is unlikely to have a major impact on growth and corporate earnings. This exceedingly volatile phase of the market is turning out to be difficult terrain for traders. But, for long-term investors dips will provide opportunities to buy quality stocks. IT, financials, cement, chemicals are good bets," he said.

5. Nifty takes at 14,300-14,350

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments pointed out that Nifty opened the new series with a gap up opening because it has bounced from the strong support of 14,300-14,350.

"This should not be considered as a reversal in the trend. The markets might be taking a breather. The short-medium trend will turn positive only post-closure of 14,750-14,800. Until then any rally up can be assessed to go short on the Nifty. If we manage to break the lows of yesterday, we could slide down to levels closer to 14,000," said Hathiramani.

Gaurav Garg, Head of Research at CapitalVia Global Research is of the view that the market may remain in the trading zone of 14,400-14,750 for a short period of time. Break above the level of 14,750 can increase the momentum and increase the positivity in the market.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Nishant Kumar
first published: Mar 26, 2021 01:37 pm

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